The government’s new credit score disclosure rules mean more consumers will get a free peek at their credit scores starting July 21, 2011.

Under final rules issued by the Federal Trade Commission and Federal Reserve Board to reflect the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, creditors must disclose the credit score used and additional information related to the score if the consumer receives less-than-favorable loan terms as an applicant or existing customer. Consumers who are denied credit because of their score also receive the score and the additional information.

In most cases, terms refer to the annual percentage rate, or APR, says Rebecca Kuehn, assistant director in the Federal Trade Commission’s division of privacy and identity protection. If there is no APR, the next most significant term affected by the credit score applies, she says.

So what can consumers expect to see in the credit score disclosure? Besides the score, it will include the range of possible credit scores under the model, four key factors that hurt the score — the number of inquiries can be added as a fifth factor — the date the score was created and the reporting agency that provided it.

“In a world where credit requirements are tightening and more people are likely to be denied, the credit score disclosure will have a bigger impact for consumers,” Kuehn says.

Expansion of existing rules

Since Jan. 1, 2011, creditors have been required to provide a more general risk-based pricing notice to consumers who were extended credit on worse terms than other consumers, or a credit score disclosure notice to every applicant. Creditors supplied an adverse action notice if consumers were denied credit or experienced unfavorable changes to an existing account. Neither the risk-based pricing nor adverse action notice included a credit score. Only the credit score disclosure contained the actual score.

“The credit score is what people are most interested in,” says Nessa Feddis, vice president and senior counsel for regulatory compliance at the American Bankers Association.

Feddis points out that many lenders already send out credit scores and disclosures to every consumer to comply with the old risk-based pricing rules. It was easier (and cheaper) than parsing out who should receive a notice.

The scores could cause confusion among consumers since there are many scoring models available, and the credit reporting agencies often don’t have access to the models, says Maxine Sweet, vice president of public education at Experian. She recommends that consumers focus on where they fall in the range of risk rather than on the number.

“We worry consumers will be confused and frustrated by that because they will have expectations that we will know specifically about their score,” Sweet says.

Still, it’s a starting point.

“It will prompt consumers to get a copy of their credit report, address any errors or learn how their own financial behaviors affect their ability to get credit and the price they pay for it,” Kuehn says.

If you take a look back at our last blog, we talked about why we often use the phrase “It’s A Jungle Out There.” Sometimes it feels like wherever there is a need, there is also a person or a company looking to exploit it. (We’re not always cynical…just cautious) Would you even believe it if we told you there was a company that existed today, that could help you restore your good credit that was a member in good standing ofThe National Association of Credit Services Organizationsand was a NON-PROFIT organization?

Believe it.

CredZoo is a 501C3 organization. While a 501C3 is generally thought of as a charitable organization, our mission is to help people with bad credit through our unique and effective credit restoration process. We care about our clients more than profits. Nothing is more important to CredZoo than your credit goals. CredZoo cares about getting results for our customers!

We are so confident in our ability to help you, that we challenge you to put us to work for you. If you’re serious about discussing ways you can improve your credit score, we’re here to help. Our credit specialists are experienced, friendly, and will help you determine the best course of action to achieve your goals — all at no obligation or cost to you. Call us for your free consultation at 888-881-5333.

Have you ever wondered why CredZoo uses the line, “It’s A Jungle Out There” when referring to the world of credit and credit repair? Well do a quick search on google and you’ll find out! People with bad credit are top targets for people and organizations looking to take advantage of someone in a tight spot, with limited (reliable) options. Search for ‘loans for people with bad credit‘ and you get over 25,000,000 results; everything from ‘bad credit daddy’ to ‘snappy money’ promising instant loan processing, no credit checks and unsecured loans with the highest approval rates. Does it sound too good to be true?

It is! Rooting around through these 25,000,000 websites, trying to find a reputable company to help you repair and restore your credit so you can get a real, reliable loan is exactly why CredZoo says: “It’s A Jungle Out There!” If you’re serious about discussing ways you can improve your credit score, we’re here to help. Our credit specialists are experienced, friendly, and will help you determine the best course of action to achieve your goals — all at no obligation or cost to you. Call us for your free consultation at 888-881-5333.

Their top nominations for the the WORST credit cards are….drumroll please….

Macy’s Card

Cards offered by retailers and specialty stores are usually a bad deal, but Macy’s still manages to stand out.

“Almost without fail, (retail) cards charge exorbitant interest rates. The worst offender I know of is the Macy’s credit card, with its 23.99% interest rate,” McHenry said, “but cards from J.C. Penney, American Eagle Outfitters, Gap, Brooks Brothers, J. Crew and Dillard’s all come in at rates over 20%.”

Many people apply for retail cards to get a discount on their purchases, typically 10% to 20% off. But you can often get the same benefits and a better overall deal by applying for a store card that’s affiliated with a major credit card brand.

“If you really want a store credit card, try to get a store card associated with Visa, MasterCard or American Express — those cards generally have interest rates lower than the store-only credit cards,” McHenry said. “For example, I just got a Banana Republic Visa with an interest rate of 14.24%. Compare that to Banana Republic’s store-only card, which charges a rate of 21.9%.”

Money Return Platinum Plus Visa from Bank of America

If you pay your balance in full, cards that offer cash rebates are usually a terrific deal… Not this one.

Oh, the terms look sweet at first: no annual fee, 0% for six months on balance transfers and a whopping 10% cash rebate.

You get the 10% cash back, however, only if you carry a balance. And the annual percentage rate for carrying a balance ranges from 9.99% to 19.99%.

“So you pay up to almost a 20% APR to earn (back) only 10% of your interest that you pay out of your pocket,” said Arnold, of CardRatings.com. “Doesn’t take a math genius to figure out that this is a lose-lose proposition.”

Your credit report contains information about where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. The federal Fair Credit Reporting Act (FCRA) promotes the accuracy and privacy of information in the files of the nation’s credit reporting companies. Some financial advisers and consumer advocates, like CredZoo, suggest that you review your credit report periodically. Why?

* Because the information it contains affects whether you can get a loan — and how much you will have to pay to borrow money.

* To make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.

* To help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

How to Order Your Free Report

The three nationwide credit reporting companies have set up one website, toll-free telephone number, and mailing address through which you can order your free annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can use the form in this brochure, or you can print it from ftc.gov/credit. Do not contact the three nationwide credit reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You may order your reports from each of the three nationwide credit reporting companies at the same time, or you can order from only one or two. The law allows you to order one free copy from each of the nationwide credit reporting companies every 12 months.

You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide credit reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

The final installment – Part VI in our “How to Manage Debt & Credit” posts: The Role Of Debt

Today, carrying installment debt is almost a fact of life. Mortgages, car loans, or small-business loans (to name a few) are part of almost everyone’s life. On the other hand, carrying credit card debt is usually not a good idea. At interest rates of 16% and up, it’s hard to justify keeping savings that could pay off that 18% department-store credit card in the bank at 2%.

Debt and credit play increasingly important roles in our lives. As the aging Baby Boomers get closer to their peak earning years, many are realizing the need to reduce debt and increase savings. Even though analyzing your spending habits and creating a budget to address your debt may seem a little overwhelming, the simplicity of the philosophy of the Depression era still stands: Never spend more than you earn. Once you have come to grips with this basic fact, managing your debt will become far easier and more rewarding.

Summary

Installment debt means the loan is paid off in a specified period of time by making predetermined payments periodically.

Revolving credit is a line of credit that is instantly available through use of a credit card (and sometimes a check).

As you pay down your debt in a revolving line of credit, the minimum payment is also reduced, thus extending your payoff period and, consequently, the interest you pay.

Spending more than you earn in any given period is a dangerous practice at best, but doing it over an extended period of time can be financial suicide.

If you think you may have too much credit card debt, begin to address it by honestly evaluating your spending habits. Examine your existing expenses to analyze how your money is spent. You will most likely be able to identify the problem areas where you are more likely to spend too much or too readily with credit cards. Then, based on your current spending practices, create a realistic budget to pay off your credit card debt in the shortest time possible while not adding any more debt to it. For assistance, you may want to turn to your financial advisor, who can help you to allocate your resources wisely to address your credit card debt.

Here are a few simple steps to help you make a plan to eliminate credit card debt:

First, list each of your credit cards. You’ll want to include the outstanding balance, interest rate, and minimum payment. This information can easily be found on your last monthly statement.

Order the cards on the list so that the credit card with the highest interest rate is at the top, and the lowest is at the bottom.

The total monthly minimum is your absolute lowest monthly payment, but remember, we want to pay more than the minimum in order to repay the debt quickly. So, take a look at your budget and see how much extra you can come up with each month in addition to the minimum. Whether it’s an extra $20 a month or $100, every little bit helps.

As your payments come due, pay the minimum on each card except for the one at the top of your list. Remember, that one has the highest interest rate and it costing you the most money by maintaining a balance. So whatever additional money you budgeted in the previous step, apply that to that card.

Continue this process until the first card is paid off. When that card is paid off, continue with the minimum payments on the other cards, but now take the amount you were paying on the first card in addition to the minimum payment and apply it to the second card on your list.

To use credit intelligently, start by examining the terms of the card(s) you are currently using. Keeping track of your cards, their rates, and your current balances will help you to be aware of how you use credit cards. Increased competition in recent years has led some credit card companies to offer enticing features to attract new cardholders, including no annual fees and low interest rates for an introductory period. (And credit card companies sometimes will give their introductory rates to existing cardholders so that they won’t transfer their balances to another credit card company.)

Borrowing money to buy a car isn’t hard if you have two things – sufficient income and a good credit rating. As we showed you last time, if you qualify for a car loan with subprime credit, you are most likely, paying between $4,000 and $10,000 more over the course of the loan just for having credit score issues! So, this makes the first step for getting a car loan getting your credit repaired with CredZoo!

Things you’ll need:

Kelley Blue Book

Consumer Reports

Consumer Reports

Internet Access

Car Insurance

Car Loans

Kelley Blue Book

Consumer Reports

The Basic Steps For A Loan:

1

Choose your new set of wheels and negotiate a price with the seller

2

Research interest rates. Several Web sites, such as Bankrate.com, publish surveys of loan rates across the United States. Compare the rates with those offered by your local bank, credit union or car dealer.

3

Find out what your current car is worth as a trade-in. Research values in the Kelley Blue Book Used Car Guide, available at the library, your bank or on the Internet.

4

Determine how much of a down payment you can make. Use your trade-in value and cash – or just cash – to come up with the standard 20 percent usually required. Talk with the car dealer that has the new car you want.

5

Apply where you find the best rates, and the length of the loan and monthly payment fit your budget.

6

Consider saving more for a down payment or choosing a less expensive car if you don’t qualify.

The cost of credit repair is small compared to the cost of living with bad credit. Below are a few examples from CredZoo.org of the cost of bad credit:

Auto Loan

If you are making vehicle payments, you are, most likely, paying between $4,000 and $10,000 more over the course of the loan just for having credit score issues. This added interest shows up every month in a higher payment.

Example: Car Loan $23,000 Vehicle Financed for 5 Years

Credit Status

Rate

Payment

Interest Paid

High Credit Score

3%

$413

$1,796

Slightly Damaged

9%

$477

$5,646

Damaged

18%

$584

$12,042

Home Loan

Damaged credit on a vehicle is nothing compared to the effect of damaged credit on a home loan. A typical home can cost between $180,000 and $300,000 more in interest of the 30 year loan, if you are buying the home with damaged credit.

Call For A Free Consulation

888-881-5333

If you're serious about discussing ways you can improve your credit score, we're here to help. Our credit specialists are experienced, friendly, and will help you determine the best course of action to achieve your goals — all at no obligation or cost to you.